[Advice Needed] Refinance with same bank?

[SkillBeatsAll]

Hello

I'm 20 and a self-employed student. Bought a vehicle in Jan, and although I had a good credit score (690 on Clearscore), got an interest rate of prime + 3.5% (Wesbank) - I presume due to it being my first time buying & self-employed status.

I was wondering if there was any merit in refinancing it at some point to try and get a lower rate? I'm quite comfortable with the payments as is, but wouldn't mind paying less, of course. Is this possible? Are there any real consequences?

Any advice would be appreciated!

 

[Steamy Tom]

Doubtful you would come out any better so early on

 

[SauRoNZA]

Odds are the fees alone would negate the re-financing.

What you can do instead is simply overpay it every month and in doing so reduce the interest rate and pay it off earlier.

Even a couple of hundred makes a difference very quickly.

R100k loan at 13%


You can also just go back to the bank and ask them to lower the rate, but you’d need to prove you are good for it first.

But for your age and being self employed it’s very unlikely that rate would get any better anyway.

 

[SkillBeatsAll]

Doubtful you would come out any better so early on

Do you know when the ideal time would be?

 

[SkillBeatsAll]

Odds are the fees alone would negate the re-financing.

What you can do instead is simply overpay it every month and in doing so reduce the interest rate and pay it off earlier.

Even a couple of hundred makes a difference very quickly.

R100k loan at 13%
View attachment 1895755

You can also just go back to the bank and ask them to lower the rate, but you’d need to prove you are good for it first.

But for your age and being self employed it’s very unlikely that rate would get any better anyway.

Good point. Was thinking of putting more into it every month for exactly this reason. Do you think it’s worth putting a lump sum into it? Like 20% of the balance?

I’ll also try asking the bank.

Thanks!!

 

[SauRoNZA]

Good point. Was thinking of putting more into it every month for exactly this reason. Do you think it’s worth putting a lump sum into it? Like 20% of the balance?

I’ll also try asking the bank.

Thanks!!

Yes absolutely.

If you put 20% in you are only paying interest on the remaining 80% of the capital balance.

 

[Steamy Tom]

Do you know when the ideal time would be?

probably around 24 months

 

[Jan van Riebeeckstad]

Hello

I'm 20 and a self-employed student. Bought a vehicle in Jan, and although I had a good credit score (690 on Clearscore), got an interest rate of prime + 3.5% (Wesbank) - I presume due to it being my first time buying & self-employed status.

I was wondering if there was any merit in refinancing it at some point to try and get a lower rate? I'm quite comfortable with the payments as is, but wouldn't mind paying less, of course. Is this possible? Are there any real consequences?

Any advice would be appreciated!

SLR

 

[SauRoNZA]

probably around 24 months

What do you mean? The earlier the better is everything with a loan.

 

[Steamy Tom]

What do you mean? The earlier the better is everything with a loan.

I was referring to if he was considering refinancing or more specifically renegotiation, not in terms of paying more or early, i agree to squash debt and do it early.

 

[SauRoNZA]

I was referring to if he was considering refinancing or more specifically renegotiation, not in terms of paying more or early, i agree to squash debt and do it early.

Yeah but why do you reckon refinancing would only make sense at 24 months?

If you could get the interest rate down you do it as early as possible.

Problem for OP is that rate is as good as it’s going to get.

 

[Steamy Tom]

Yeah but why do you reckon refinancing would only make sense at 24 months?

If you could get the interest rate down you do it as early as possible.

Problem for OP is that rate is as good as it’s going to get.

Mainly for that reason, they would not really be willing to renegotiate so early and even if another finance institution did any saving would probably be negated by fees.

 

[Nerfherder]

Good point. Was thinking of putting more into it every month for exactly this reason. Do you think it’s worth putting a lump sum into it? Like 20% of the balance?

I’ll also try asking the bank.

Thanks!!

You can always ask for a better rate - get a quote from another bank to see if you would actually get a better rate.

Best is always to just pay off quicker. Some places have early settlement fees though so just check.
With most loans, paying off a chunk of the loan early will reduce your interest, which is the most optimal.